Inflation Matters for Stocks Because It Short Circuits Business Cycles

We’re exiting a multi-decade period of disinflationary forces with low interest rates and entering a stretch of de-globalization which could see inflation become much more problematic. How that affects the business cycle may be the key to how things play out this time for equity returns.

Inflation matters for share prices, but it’s not just because of what the resulting higher interest rates do to valuations.